AIR T, INC. FORWARD-LOOKING STATEMENTS
This section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" ("MD&A") is intended to provide a reader of
our financial statements with a narrative from the perspective of management on
our financial condition, results of operations, liquidity, and certain other
factors that may affect our future results. The MD&A provides a narrative
analysis explaining the reasons for material changes in the Company's (i)
financial condition during the period from the most recent fiscal year-end,
March 31, 2022 , to and including September 30, 2022 and (ii) results of
operations during the current fiscal period(s) as compared to the corresponding
period(s) of the preceding fiscal year.
This Quarterly Report on Form 10-Q, including the MD&A, contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements reflect our current views with
respect to future events and financial performance. The words "believe,"
"expect," "anticipate," "intend," "estimate," "forecast," "project," "should,"
"will," "continue" and similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Any and all forecasts and projections in this
document are "forward looking statements" and are based on management's current
expectations or beliefs. From time to time, we may also provide oral and written
forward-looking statements in other materials we release to the public, such as
press releases, presentations to securities analysts or investors, or other
communications by us. Any or all of our forward-looking statements in this
report and in any public statements we make could be materially different from
actual results. Accordingly, we wish to caution investors that any
forward-looking statements made by or on behalf of us are subject to
uncertainties and other factors that could cause actual results to differ
materially from such statements.
We also wish to caution investors that other factors might in the future prove
to be important in affecting our results of operations. New factors emerge from
time to time; it is not possible for management to predict all of such factors,
nor can it assess the impact of each such factor on the business or the extent
to which any factor, or a combination of factors, may cause actual results to
differ materially from those contained in any forward-looking statements.
We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 1 of Part 1 of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year endedMarch 31, 2022 (including the information presented therein under Risk Factors), as well other publicly available information.
Overview
Air T, Inc. (the "Company," "Air T ," "we" or "us") is a holding company with a portfolio of operating businesses and financial assets. Our goal is to prudently and strategically diversifyAir T's earnings power and compound the growth in its free cash flow per share over time.
We currently operate in four industry segments:
•Overnight air cargo, which operates in the air express delivery services industry;
•Ground equipment sales, which manufactures and provides mobile deicers and other specialized equipment products to passenger and cargo airlines, airports, the military and industrial customers; •Commercial aircraft, engines and parts, which manages and leases aviation assets; supplies surplus and aftermarket commercial jet engine components; provides commercial aircraft disassembly/part-out services; commercial aircraft parts sales; procurement services and overhaul and repair services to airlines and, •Corporate and other, which acts as the capital allocator and resource for other consolidated businesses. Further, Corporate and other also comprises insignificant businesses and business interests that do not pertain to other reportable segments.
Each business segment has separate management teams and infrastructures that offer different products and services. We evaluate the performance of our business segments based on operating income and Adjusted EBITDA.
Results of Operations
Impacts from Geopolitical, Macroeconomic, and COVID-19 Challenges
We continue to be exposed to macroeconomic pressures as a result of the lingering impacts of the COVID-19 pandemic, supply chain challenges, foreign currency fluctuations, and spikes in commodity prices as a result of geopolitical challenges, including the war in
26
--------------------------------------------------------------------------------COVID-19 and its impact on the current financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk with respect to our financial condition and results of operations. Each of our businesses implemented measures to attempt to limit the impact of COVID-19 but we still experienced a number of disruptions, and we experienced and continue to experience to a lesser degree a reduction in demand for commercial aircraft, jet engines and parts compared to historical periods. Many of our businesses may continue to generate reduced operating cash flow and may continue to operate at a loss from time to time during fiscal 2023. We expect that the impact of COVID-19 will continue to some extent. The fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions, and, as a result, present material uncertainty and risk with respect to us and our results of operations. The Company believes the estimates and assumptions underlying the Company's condensed consolidated financial statements are reasonable and supportable based on the information available as ofSeptember 30, 2022 ; however, uncertainty over the ultimate direct and indirect impact COVID-19 will have on the global economy generally, and the Company's businesses in particular, makes any estimates and assumptions as ofSeptember 30, 2022 inherently less certain than they would be absent the current and potential impacts of COVID-19. The war inEastern Europe and related sanctions imposed onRussia and related actors have resulted in interest rate acceleration and inflation, including, but not limited to, a significant increase in the price of commodities. We expect that these factors will continue to negatively impact our businesses at least in the short-term. The ultimate impact on our overall financial condition and operating results will depend on the currently unknowable duration and severity of these activities. We continue to evaluate the long-term impact that these may have on our business model, however there can be no assurance that the measures we have taken or will take will completely offset the negative impact.
Second Quarter Fiscal 2023 Compared to Second Quarter Fiscal 2022
Consolidated revenue for the three-month period ended
Following is a table detailing revenue by segment, net of intercompany during the three months endedSeptember 30, 2022 compared to the same quarter in the prior fiscal year (in thousands): Three Months Ended September 30, Change 2022 2021 Overnight Air Cargo$ 22,069 $ 18,847 $ 3,222 17 % Ground Equipment Sales 18,019 9,189
8,830 96 %
Commercial Jet Engines and Parts 18,986 14,916
4,070 27 %
Corporate and Other 1,614 286 1,328 464 %
$ 60,688 $ 43,238 $ 17,450 40 %
Revenues from the air cargo segment for the three-month period ended
September 30, 2022 increased by $3.2 million (17%) compared to the second
quarter of the prior fiscal year. The increase was principally attributable to
higher administrative fees, maintenance labor and pass-through revenues from
FedEx.
The ground equipment sales segment contributed approximately $18.0 million and
$9.2 million to the Company's revenues for the three-month periods ended
September 30, 2022 and 2021 respectively, representing a $8.8 million (96%)
increase in the current quarter. The increase was primarily driven by
significantly higher commercial ultimate deicers sales this quarter compared to
prior year comparable quarter. At September 30, 2022 , the ground equipment sales
segment's order backlog was $21.1 million compared to $10.9 million at
September 30, 2021 .
The commercial jet engines and parts segment contributed $19.0 million of
revenues in the quarter ended September 30, 2022 compared to $14.9 million in
the comparable prior year quarter, which is an increase of $4.1 million (27%).
The increase was primarily driven by higher component part sales across all
companies within the segment in the current quarter compared to prior year
comparable quarter.
Revenues from the corporate and other segment for the three-month period ended
September 30, 2022 increased by $1.3 million (464%) compared to the second
quarter of the prior fiscal year. The increase was primarily attributable to the
acquisitions mentioned in Note 2 of the Notes to Condensed Consolidated
Financial Statements of this report.
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Following is a table detailing operating income (loss) by segment during the
three months ended September 30, 2022 compared to the same quarter in the prior
fiscal year (in thousands):
Three Months Ended
September 30, Change
2022 2021
Overnight Air Cargo $ 845 $ 857 $ (12)
Ground Equipment Sales 1,887 43 1,844
Commercial Jet Engines and Parts (204) 1,902 (2,106)
Corporate and Other (2,349)
(2,098) (251)
$ 179 $ 704 $ (525) Consolidated operating income for the quarter ended
The air cargo segment's operating income for the three-month period endedSeptember 30, 2022 was relatively flat compared to the same quarter in the prior fiscal year. The increase in revenue discussed above was offset by the impairment of previously capitalized costs on a software project that was deemed no longer probable to be completed and placed in service.
The ground equipment sales segment's operating income for the quarter ended
The commercial jet engines and parts segment generated an operating loss of$0.2 million in the current-year quarter compared to an operating income of$1.9 million in the prior-year quarter. The change was primarily attributable to the sale of an airframe with higher profit margin in the prior-year quarter that did not recur in the current-year quarter. In addition, this segment incurred an inventory write-down of$1.0 million in the current quarter compared to none in the prior-year comparable quarter.
The corporate and other segment's operating loss for the three-month period
ended
Following is a table detailing non-operating income (expense) during the three months endedSeptember 30, 2022 compared to the same quarter in the prior fiscal year (in thousands): Three Months Ended September 30, Change 2022 2021 Interest expense (1,996) (1,167)$ (829) Income from equity method investments 266 14 252 Gain on forgiveness of Paycheck Protection Program ("PPP") loan - 8,331 (8,331) Other (357) 159 (516)$ (2,087) $ 7,337 $ (9,424) The Company had a net non-operating loss of$2.1 million during the quarter endedSeptember 30, 2022 , compared to net non-operating income of$7.3 million in the prior-year quarter. In the second quarter 2021, the Company recorded a$8.3 million gain recognized on the SBA's forgiveness of the Company's PPP loan. In the current-year quarter, the Company had higher interest expense due to having more outstanding TruPs shares and more indebtedness at Contrail compared to the prior-year quarter. In addition, the Company recorded a$0.2 million unrealized loss due to fair value adjustments on our marketable investments in the current year compared to the prior year's$0.3 million unrealized gain. During the three-month period endedSeptember 30, 2022 , the Company recorded global income tax benefit of$0.6 million at an effective tax rate ("ETR") of 30.0%. The Company records income taxes using an estimated annual effective tax rate for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the three-month period endedSeptember 30, 2022 were the change in valuation allowance related to Delphax, other capital losses, the estimated benefit for the exclusion of income for SAIC under Section 831(b), and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail. During the three-month period endedSeptember 30, 2021 , the Company recorded$38.0 thousand in income tax expense at an ETR of 0.5%. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax 28 -------------------------------------------------------------------------------- rate for the three-month period endedSeptember 30, 2021 were the change in valuation allowance related to Delphax and other capital losses, the estimated benefit for the exclusion of income for SAIC under Section 831(b), the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail, and the exclusion from taxable income of the PPP loan forgiveness income, as directed by the CARES Act enacted in 2020, and any accrued interest forgiven as a part of that Act.
First Six Months of Fiscal 2022 Compared to First Six Months of Fiscal 2021
Following is a table detailing revenue by segment (in thousands):
Six Months Ended
September 30, Change
2022 2021
Overnight Air Cargo $ 42,633 $ 37,697 $ 4,936 13 %
Ground Equipment Sales 23,834 17,371 6,463 37 %
Commercial Jet Engines and Parts 41,841 24,510 17,331 71 %
Corporate and Other 3,242 628 2,614 416 %
$ 111,550 $ 80,206 $ 31,344 39 %
Revenues from the air cargo segment for the six months ended September 30, 2022
increased by $4.9 million (13%) compared to the six months ended September 30,
2021 . The increase was principally attributable to increased administrative fees
as well as higher pass-through revenue from FedEx as a result of increased
business activity.
The ground equipment sales segment contributed approximately $23.8 million and
$17.4 million to the Company's revenues for the six-month periods ended
September 30, 2022 and 2021 respectively, representing a $6.5 million (37%)
increase in the current six-month period. The increase was primarily driven by
significantly higher commercial ultimate deicers sales in the current year.
The commercial jet engines and parts segment contributed $41.8 million of
revenues in the six months ended September 30, 2022 compared to $24.5 million in
the comparable prior year six months. The increase was primarily driven by
higher component part sales across all companies within the segment and engine
sales at AirCo 1 that did not occur in the prior fiscal year.
Revenues from the corporate and other segment in the six months ended
Following is a table detailing operating income (loss) by segment during the six months endedSeptember 30, 2022 compared to the same six months in the prior fiscal year (in thousands): Six Months Ended September 30, Change 2022 2021 Overnight Air Cargo$ 1,922 $ 1,589 $ 333 Ground Equipment Sales$ 2,029 $ 1,465 564 Commercial Jet Engines and Parts$ 2,870 $ 1,664 1,206 Corporate and Other (5,809) (4,019) (1,790)$ 1,012 $ 699 $ 313 Consolidated operating income for the six months endedSeptember 30, 2022 was$1.0 million compared to an operating income of$0.7 million for the comparable six months of the prior year.
Operating income for the air cargo segment for the six months ended
The ground equipment sales segment operating income increased by$0.6 million to$2.0 million in the six-month period endedSeptember 30, 2022 versus the prior year comparable period. This increase was primarily attributable to the revenue increase noted above. The commercial jet engines and parts segment generated an operating income of$2.9 million in the current-year six month period compared to an operating income of$1.7 million in the prior-year six-month period. The change was primarily attributable to the increased component sales as well as engine sales at AirCo 1 as explained in the segment revenue discussion above. 29 -------------------------------------------------------------------------------- The corporate and other segment's operating loss increased by$1.8 million to$5.8 million from the prior-year loss of$4.0 million primarily driven by higher benefits cost for the six months endedSeptember 30, 2022 . Following is a table detailing non-operating income (loss) during the six months endedSeptember 30, 2022 compared to the same six months in the prior fiscal year (in thousands): Six Months Ended September 30, Change 2022 2021 Interest expense (3,818) (2,105)$ (1,713) Income from equity method investments 798 97 701 Gain on forgiveness of Paycheck Protection Program ("PPP") loan - 8,331 (8,331) Other (509) 1,340 (1,849) (3,529) 7,663$ (11,192) The Company had a net non-operating loss of$3.5 million for the six months endedSeptember 30, 2022 compared to a net non-operating income of$7.7 million in the prior-year six-month period. The decrease was primarily attributable to the$8.3 million gain recognized on the SBA's forgiveness of the Company's PPP loan and a$0.5 million gain on the liquidation of Delphax France, a subsidiary of Delphax Technologies, Inc. in the prior year. In the current year, the Company incurred$1.7 million higher interest expense due to having more outstanding TruPs shares and more indebtedness at Contrail. In addition, the Company recorded a$0.2 million unrealized loss due to fair value adjustments on our marketable investments in the current year compared to prior year's$0.6 million unrealized gain. The decrease was partially offset by$0.7 million higher net income from equity method investments in the current year compared to the prior year. During the six-month period endedSeptember 30, 2022 , the Company recorded global income tax benefit of$0.4 million at an effective tax rate of 15.1%. The Company records income taxes using an estimated annual effective tax rate for interim reporting. The primary factors contributing to the difference between the federal statutory rate of 21% and the Company's effective tax rate for the six-month period endedSeptember 30, 2022 were the change in valuation allowance related to Delphax and other capital losses, the estimated benefit for the exclusion of income for SAIC under Section 831(b), and the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail. During the six-month period endedSeptember 30, 2021 , the Company recorded$33.0 thousand in income tax benefit which resulted in an effective tax rate of 0.4%. The primary factors contributing to the difference between the federal statutory rate of 21.0% and the Company's effective tax rate for the six-month period endedSeptember 30, 2021 were the changes in valuation allowance related to Delphax, the estimated benefit for the exclusion of income for SAIC under Section 831(b), the exclusion from the tax provision of the minority owned portion of the pretax income of Contrail, the exclusion from taxable income of the PPP loan forgiveness income, as directed by the CARES Act enacted in 2020, and any accrued interest forgiven as a part of that Act.
Critical Accounting Policies and Estimates
The Company's significant accounting policies are fully described in Note 1 to the condensed consolidated financial statements and in the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year endedMarch 31, 2022 . The preparation of the Company's condensed consolidated financial statements in conformity with accounting principles generally accepted inthe United States requires the use of estimates and assumptions to determine certain assets, liabilities, revenues and expenses. Management bases these estimates and assumptions upon the best information available at the time of the estimates or assumptions. The Company's estimates and assumptions could change materially as conditions within and beyond our control change. Accordingly, actual results could differ materially from estimates. There were no significant changes to the Company's critical accounting policies and estimates during the three-months endedSeptember 30, 2022 . Seasonality The ground equipment sales segment business has historically been seasonal, with the revenues and operating income typically being lower in the first and fourth fiscal quarters as commercial deicers are typically delivered prior to the winter season. Other segments have typically not experienced material seasonal trends. Supply Chain and Inflation The Company continues to monitor a wide range of health, safety, and regulatory matters related to the COVID-19 pandemic including its impact on our business operations. In particular, supply chain disruptions have impacted product availability and costs across all markets including the aviation industry in which our company operates. Additionally,the United States is experiencing workforce shortages and increasing inflation which has created a competitive wage environment. Thus far, the direct impact of these 30 -------------------------------------------------------------------------------- items on our businesses has not been material. However, ongoing or future disruptions to consumer demand, our supply chain, product pricing inflation, our ability to attract and retain employees, or our ability to procure products and fulfill orders, could negatively impact the Company's operations and financial results in a material manner. We continue to look for proactive ways to mitigate potential impacts of supply chain disruptions at our businesses.
Liquidity and Capital Resources
As ofSeptember 30, 2022 , the Company held approximately$9.5 million in cash and cash equivalents and restricted cash,$2.0 million of which related to restricted cash collateralized held for three opportunity zone investments made by the Company - Air T OZ 1, LLC, Air T OZ 2, LLC, and Air T OZ 3, LLC (the "Opportunity Zone Funds"), each aMinnesota limited liability company and a subsidiary of the Company. The Company also held$1.6 million in restricted investments held as statutory reserve of SAIC. The Company has approximately$0.8 million of marketable securities and an aggregate of approximately$19.0 million in available funds under its lines of credit as ofSeptember 30, 2022 . As ofSeptember 30, 2022 , the Company's working capital amounted to$73.4 million , a decrease of$24.0 million compared toMarch 31, 2022 primarily driven by the increase in current portion of long-term debt as the revolving lines of credit atAir T with MBT and Contrail with ONB become due within a year. As mentioned in Note 12 of Notes to condensed Consolidated Financial Statements included under Part I, Item 1 of this report, onJune 9, 2022 , the Company,Jet Yard and MBT entered into Amendment No. 1 to Third Amended and Restated Credit Agreement ("Amendment") and a related Overline Note ("Overline Note") in the original principal amount of$5.0 million . The Amendment and Note memorialize an increase to the amount that may be drawn by the Company on the MBT revolving credit agreement from$17.0 million to$22.0 million . As ofSeptember 30, 2022 , the unused commitment of the Overline Note was$4.1 million and no unused commitment on the MBT Revolver. The total amount of borrowings under the facility as revised is now the Company's calculated borrowing base or$22.0 million . The borrowing base calculation methodology remains unchanged. As mentioned in Note 9 and Note 12 of Notes to Condensed Consolidated Financial Statements of this report, onSeptember 30, 2022 , the Company executed a promissory note payable to CCI for$2.0 million that bears interest at 10% per annum and matures onDecember 30, 2022 . The note may be prepaid at any time without penalty. The note is subordinate and junior to any and all indebtedness of the Company to MBT. As mentioned in Note 15 of Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 of this Report on Form 10-Q, in 2016, Contrail entered into an Operating Agreement with the Seller providing for the put and call options with regard to the 21% non-controlling interest retained by the Seller. The Seller is the founder of Contrail and its current Chief Executive Officer. The Put/Call Option permits the Seller or the Company to requireContrail Aviation to purchase all of the Seller's equity membership interests inContrail Aviation commencing onJuly 18, 2021 . As of the date of this filing, neither the Seller nor the Company has indicated an intent to exercise the put and call options. If either side were to exercise the option, the Company anticipates that the price would approximate the fair value of the Contrail RNCI, as determined on the transaction date. The Company currently expects that it would fund any required payment from cash provided by operations. As mentioned in Note 15 of Notes to condensed Consolidated Financial Statements included under Part I, Item 1 of this report, onMay 5, 2021 , the Company formed an aircraft asset management business called CAM and an aircraft capital joint venture called CJVII. The venture focuses on acquiring commercial aircraft and jet engines for leasing, trading and disassembly. CJVII targets investments in current generation narrow-body aircraft and engines, building onContrail Aviation's origination and asset management expertise. CAM serves two separate and distinct functions: 1) to direct the sourcing, acquisition and management of aircraft assets owned by CJVII, and 2) to directly invest into CJVII alongside other institutional investment partners. CAM has an initial commitment to CJVII of approximately$53.0 million , which is comprised of an$8.0 million initial commitment from the Company and an approximately$45.0 million initial commitment from MRC. As ofSeptember 30, 2022 , CAM's remaining capital commitments are approximately$0.8 million from the Company and$17.3 million from MRC. CJVII was initially capitalized with up to$408.0 million of equity from the Company and three institutional investor partners, consisting of$108.0 million in initial commitments and$300.0 million in upsize capacity, contingent on underwriting and transaction appeal. As of the date of this filing,$104.4 million of capital has been deployed to CJVII. The timing of the remaining capital commitment is not yet known at this time. The revolving lines of credit atAir T with MBT and Contrail with ONB have a due date or expire within the next twelve months. We are currently seeking to refinance these obligations prior to their respective maturity dates; however, there is no assurance that we will be able to execute this refinancing or, if we are able to refinance these obligations, that the terms of such refinancing would be as favorable as the terms of our existing credit facility. The Company believes it is probable that the cash on hand and current financings, net cash provided by operations from its remaining operating segments, together with amounts available under our current revolving lines of credit, as amended, will be sufficient to meet its obligations as they become due in the ordinary course of business for at least 12 months following the date these financial statements are issued. 31 --------------------------------------------------------------------------------
Cash Flows
Following is a table of changes in cash flow for the six months ended
Six Months Ended
2022 2021
Net Cash Used in Operating Activities (13,946) (22,753)
Net Cash Used in Investing Activities (1,776) (2,376)
Net Cash Provided by Financing Activities 16,757 15,425
Effect of foreign currency exchange rates on cash and cash equivalents
62 51
Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash
1,097 (9,653)
Net cash used in operating activities was $13.9 million for the six-month period
ended September 30, 2022 compared to net cash used in operating activities of
$22.8 million in the prior year six-month period, resulting in an overall
decrease of $8.9 million period over period. The change in net cash used in
operating activities was primarily driven by a net increase in cash provided by
receivables of $7.7 million due to increased sales in the current period and
lower payables and accrued expenses of $5.0 million , mostly attributable to
timing of payroll, bonus, and health insurance payments. Those changes are
partially offset by a $4.0 million net increase in cash used to purchase
inventories at Contrail and AirCo.
Net cash used in investing activities for the six-month period ended
September 30, 2022 was $1.8 million compared to net cash used in investing
activities of $2.4 million in the prior-year period. The decrease in cash usage
in investing activities was primarily driven by higher distributions received
from equity method investments and less cash spent on purchases of intangible
assets in the current year compared to the prior year.
Net cash provided by financing activities for the six-month period ended
September 30, 2022 was $16.8 million compared to net cash provided by financing
activities of $15.4 million in the prior-year period. The increase was primarily
driven by higher net cash proceeds from the Company's term loans and revolving
lines of credit, partially offset by issuance of TruPs in the prior quarter that
did not recur in the current quarter.
Non-GAAP Financial Measures
The Company uses adjusted earnings before taxes, interest, and depreciation and
amortization ("Adjusted EBITDA"), a non-GAAP financial measure as defined by the
SEC , to evaluate the Company's financial performance. This performance measure
is not defined by accounting principles generally accepted in the United States
and should be considered in addition to, and not in lieu of, GAAP financial
measures.
Adjusted EBITDA is defined as earnings before taxes, interest, and depreciation
and amortization, adjusted for specified items. The Company calculates Adjusted
EBITDA by removing the impact of specific items and adding back the amounts of
interest expense and depreciation and amortization to earnings before income
taxes. When calculating Adjusted EBITDA, the Company does not add back
depreciation expense for aircraft engines that are on lease, as the Company
believes this expense matches with the corresponding revenue earned on engine
leases. Depreciation expense for leased engines totaled $0.4 million and $18.0
thousand for the three months ended September 30, 2022 and 2021, respectively.
Management believes that Adjusted EBITDA is a useful measure of the Company's
performance because it provides investors additional information about the
Company's operations allowing better evaluation of underlying business
performance and better period-to-period comparability. Adjusted EBITDA is not
intended to replace or be an alternative to operating income (loss), the most
directly comparable amounts reported under GAAP.
The tables below provide a reconciliation of operating income (loss) to Adjusted
EBITDA for the three and six months ended
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Three months ended Six months ended
9/30/2022 9/30/2021 9/30/2022 9/30/2021
Operating income $ 179 $ 704 $ 1,012 $ 699
Depreciation and amortization (excluding
leased engines depreciation) 645 304 1,252 584
Asset impairment, restructuring or
impairment charges 1,488 - 1,536 -
(Gain) Loss on disposition of assets (1) - (2) 3
Security expenses 19 60 34 65
Adjusted EBITDA $ 2,330 $ 1,068 $ 3,832 $ 1,351
Included in the asset impairment, restructuring or impairment charges for the
three months ended September 30, 2022 was a write-down of $1.0 million on the
commercial jet engines and parts segment's inventory. Also included in that
number is an impairment charge of $0.3 million related to previously capitalized
costs on a software project that was deemed no longer probable to be completed
and placed in service.
The table below provides Adjusted EBITDA by segment for the three and six months
ended
Three months ended Six months ended
9/30/2022 9/30/2021 9/30/2022 9/30/2021
Overnight Air Cargo $ 1,204 $ 871 $ 2,300 $ 1,617
Ground Equipment Sales 1,933 74 2,124 1,531
Commercial Jet Engines and Parts 979 2,098 4,248 2,024
Corporate and Other (1,786) (1,975) (4,840) (3,821)
Adjusted EBITDA $ 2,330 $ 1,068 $ 3,832 $ 1,351 © Edgar Online, source
