Quarterly Report (10-q)

Date : 08/01/2019 @ 6:52PM
Source : Edgar (US Regulatory)
Stock : Atlas Air Worldwide Holdings (AAWW)
Quote : 23.5  0.0 (0.00%) @ 9:00AM
Atlas Air Worldwide share price Chart

Quarterly Report (10-q)

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cover

  

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019  

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to           

Commission File Number: 001-16545

 

Atlas Air Worldwide Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

13-4146982

(State or other jurisdiction of incorporation)

 

(IRS Employer Identification No.)

 

 

 

2000 Westchester Avenue, Purchase, New York

 

10577

(Address of principal executive offices)

 

(Zip Code)

 

(914) 701-8000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.01 Par Value

 

AAWW

 

The NASDAQ Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 Large accelerated filer       Accelerated filer      Non-accelerated filer       Smaller reporting company       Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  

As of July 26, 2019, there were 25,854,140 shares of the registrant’s Common Stock outstanding.

Securities registered pursuant to Section 12(b) of the Act:

 

 

 


 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

Part I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

3

 

 

 

 

 

 

 

Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018 (unaudited)

 

3

 

 

 

 

 

 

 

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and 2018 (unaudited)

 

4

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2019 and 2018 (unaudited)

 

5

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Six Months ended June 30, 2019 and 2018 (unaudited)

 

6

 

 

 

 

 

 

 

Consolidated Statements of Stockholders’ Equity as of and for the Three and Six Months ended June 30, 2019 and 2018 (unaudited)

 

7

 

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

 

8

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

36

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

36

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

37

 

 

 

 

 

Item 1A.

 

Risk Factors

 

37

 

 

 

 

 

Item 6.

 

Exhibits

 

37

 

 

 

 

 

 

 

Exhibit Index

 

38

 

 

 

 

 

 

 

Signatures

 

39

 

 

 

 


 

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Atlas Air Worldwide Holdings, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

(Unaudited)

 

 

 

June 30, 2019

 

 

December 31, 2018

 

Assets

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

110,665

 

 

$

221,501

 

Short-term investments

 

 

7,153

 

 

 

15,624

 

Restricted cash

 

 

10,093

 

 

 

11,240

 

Accounts receivable, net of allowance of $1,633 and $1,563, respectively

 

 

265,489

 

 

 

269,320

 

Prepaid expenses and other current assets

 

 

81,900

 

 

 

112,146

 

Total current assets

 

 

475,300

 

 

 

629,831

 

Property and Equipment

 

 

 

 

 

 

 

 

Flight equipment

 

 

5,252,971

 

 

 

5,213,734

 

Ground equipment

 

 

83,250

 

 

 

75,939

 

Less:  accumulated depreciation

 

 

(954,100

)

 

 

(860,354

)

Flight equipment modifications in progress

 

 

128,166

 

 

 

32,916

 

Property and equipment, net

 

 

4,510,287

 

 

 

4,462,235

 

Other Assets

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

538,631

 

 

 

-

 

Deferred costs and other assets

 

 

377,962

 

 

 

345,037

 

Intangible assets, net and goodwill

 

 

83,162

 

 

 

97,689

 

Total Assets

 

$

5,985,342

 

 

$

5,534,792

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

66,441

 

 

$

87,229

 

Accrued liabilities

 

 

485,436

 

 

 

465,669

 

Current portion of long-term debt and finance lease

 

 

268,686

 

 

 

264,835

 

Current portion of long-term operating leases

 

 

146,091

 

 

 

-

 

Total current liabilities

 

 

966,654

 

 

 

817,733

 

Other Liabilities

 

 

 

 

 

 

 

 

Long-term debt and finance lease

 

 

2,125,228

 

 

 

2,205,005

 

Long-term operating leases

 

 

445,821

 

 

 

-

 

Deferred taxes

 

 

195,608

 

 

 

256,970

 

Financial instruments and other liabilities

 

 

124,922

 

 

 

187,120

 

Total other liabilities

 

 

2,891,579

 

 

 

2,649,095

 

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;

    31,026,500 and 30,582,571 shares issued, 25,854,140 and 25,590,293

    shares outstanding (net of treasury stock), as of June 30, 2019

    and December 31, 2018, respectively

 

 

310

 

 

 

306

 

Additional paid-in-capital

 

 

746,725

 

 

 

736,035

 

Treasury stock, at cost; 5,172,360 and 4,992,278 shares, respectively

 

 

(213,728

)

 

 

(204,501

)

Accumulated other comprehensive loss

 

 

(3,312

)

 

 

(3,832

)

Retained earnings

 

 

1,597,114

 

 

 

1,539,956

 

Total stockholders’ equity

 

 

2,127,109

 

 

 

2,067,964

 

Total Liabilities and Equity

 

$

5,985,342

 

 

$

5,534,792

 

 

See accompanying Notes to Unaudited Consolidated Financial Statements

 

3


 

Atlas Air Worldwide Holdings, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

June 30, 2019

 

 

June 30, 2018

 

 

June 30, 2019

 

 

June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue

 

$

663,918

 

 

$

666,145

 

 

$

1,343,601

 

 

$

1,256,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

141,450

 

 

 

129,176

 

 

 

286,924

 

 

 

254,258

 

Aircraft fuel

 

 

122,158

 

 

 

129,706

 

 

 

228,479

 

 

 

226,009

 

Maintenance, materials and repairs

 

 

113,471

 

 

 

88,236

 

 

 

217,091

 

 

 

173,115

 

Depreciation and amortization

 

 

63,689

 

 

 

50,834

 

 

 

128,170

 

 

 

100,464

 

Travel

 

 

46,374

 

 

 

42,358

 

 

 

91,403

 

 

 

82,205

 

Aircraft rent

 

 

40,335

 

 

 

40,281

 

 

 

82,223

 

 

 

79,805

 

Navigation fees, landing fees and other rent

 

 

37,982

 

 

 

37,698

 

 

 

78,198

 

 

 

73,295

 

Passenger and ground handling services

 

 

30,525

 

 

 

30,202

 

 

 

62,685

 

 

 

58,264

 

Special charge

 

 

3,269

 

 

 

9,374

 

 

 

3,269

 

 

 

9,374

 

Transaction-related expenses

 

 

734

 

 

 

240

 

 

 

3,261

 

 

 

510

 

Other

 

 

54,961

 

 

 

47,094

 

 

 

106,054

 

 

 

97,345

 

Total Operating Expenses

 

 

654,948

 

 

 

605,199

 

 

 

1,287,757

 

 

 

1,154,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

8,970

 

 

 

60,946

 

 

 

55,844

 

 

 

101,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating  Expenses (Income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(1,278

)

 

 

(1,388

)

 

 

(3,322

)

 

 

(3,112

)

Interest expense

 

 

30,045

 

 

 

29,182

 

 

 

60,398

 

 

 

56,524

 

Capitalized interest

 

 

(627

)

 

 

(1,465

)

 

 

(1,090

)

 

 

(3,215

)

Loss on early extinguishment of debt

 

 

-

 

 

 

-

 

 

 

245

 

 

 

-

 

Unrealized (gain) loss on financial instruments

 

 

(42,300

)

 

 

50,031

 

 

 

4,275

 

 

 

57,771

 

Other (income) expense, net

 

 

945

 

 

 

(7,277

)

 

 

(2,030

)

 

 

(11,752

)

Total Non-operating Expenses (Income)

 

 

(13,215

)

 

 

69,083

 

 

 

58,476

 

 

 

96,216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes

 

 

22,185

 

 

 

(8,137

)

 

 

(2,632

)

 

 

5,299

 

Income tax (benefit) expense

 

 

(64,683

)

 

 

12,986

 

 

 

(59,790

)

 

 

16,794

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, net of taxes

 

 

86,868

 

 

 

(21,123

)

 

 

57,158

 

 

 

(11,495

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of taxes

 

 

-

 

 

 

(27

)

 

 

-

 

 

 

(43

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

86,868

 

 

$

(21,150

)

 

$

57,158

 

 

$

(11,538

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share from continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

3.36

 

 

$

(0.83

)

 

$

2.22

 

 

$

(0.45

)

Diluted

 

$

1.61

 

 

$

(0.83

)

 

$

2.21

 

 

$

(0.45

)

Loss per share from discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

-

 

 

$

(0.00

)

 

$

-

 

 

$

(0.00

)

Diluted

 

$

-

 

 

$

(0.00

)

 

$

-

 

 

$

(0.00

)

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

3.36

 

 

$

(0.83

)

 

$

2.22

 

 

$

(0.45

)

Diluted

 

$

1.61

 

 

$

(0.83

)

 

$

2.21

 

 

$

(0.45

)

Weighted average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

25,851

 

 

 

25,565

 

 

 

25,794

 

 

 

25,501

 

Diluted

 

 

26,953

 

 

 

25,565

 

 

 

25,921

 

 

 

25,501

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to Unaudited Consolidated Financial Statements

4


 

Atlas Air Worldwide Holdings, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

June 30, 2019

 

 

June 30, 2018

 

 

June 30, 2019

 

 

June 30, 2018

 

Net Income (Loss)

 

$

86,868

 

 

$

(21,150

)

 

$

57,158

 

 

$

(11,538

)

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification to interest expense

 

 

337

 

 

 

365

 

 

 

681

 

 

 

750

 

Income tax expense

 

 

(80

)

 

 

(120

)

 

 

(161

)

 

 

(177

)

Other comprehensive income

 

 

257

 

 

 

245

 

 

 

520

 

 

 

573

 

Comprehensive Income (Loss)

 

$

87,125

 

 

$

(20,905

)

 

$

57,678

 

 

$

(10,965

)

 

See accompanying Notes to Unaudited Consolidated Financial Statements

5


 

Atlas Air Worldwide Holdings, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

For the Six Months Ended

 

 

 

June 30, 2019

 

 

June 30, 2018

 

Operating Activities:

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, net of taxes

 

$

57,158

 

 

$

(11,495

)

Less: Loss from discontinued operations, net of taxes

 

 

-

 

 

 

(43

)

Net Income (Loss)

 

 

57,158

 

 

 

(11,538

)

 

 

 

 

 

 

 

 

 

Adjustments to reconcile Net Income (Loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

157,820

 

 

 

121,606

 

Accretion of debt securities discount

 

 

208

 

 

 

(512

)

Provision for allowance for doubtful accounts

 

 

4

 

 

 

1,179

 

Loss on early extinguishment of debt

 

 

245

 

 

 

-

 

Special charge, net of cash payments

 

 

3,269

 

 

 

9,374

 

Unrealized loss on financial instruments

 

 

4,275

 

 

 

57,771

 

Deferred taxes

 

 

(60,122

)

 

 

16,561

 

Stock-based compensation

 

 

10,025

 

 

 

10,627

 

Changes in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

26

 

 

 

(27,699

)

Prepaid expenses, current assets and other assets

 

 

(23,835

)

 

 

(10,815

)

Accounts payable and accrued liabilities

 

 

(40,076

)

 

 

9,357

 

Net cash provided by operating activities

 

 

108,997

 

 

 

175,911

 

Investing Activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(76,754

)

 

 

(54,791

)

Payments for flight equipment and modifications

 

 

(99,161

)

 

 

(448,388

)

Proceeds from insurance

 

 

38,133

 

 

 

-

 

Proceeds from investments

 

 

9,313

 

 

 

5,399

 

Net cash used for investing activities

 

 

(128,469

)

 

 

(497,780

)

Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from debt issuance

 

 

19,723

 

 

 

305,059

 

Payment of debt issuance costs

 

 

(955

)

 

 

(4,781

)

Payments of debt and finance lease obligations

 

 

(160,091

)

 

 

(115,194

)

Proceeds from revolving credit facility

 

 

50,000

 

 

 

135,000

 

Payment of revolving credit facility

 

 

-

 

 

 

(60,000

)

Customer maintenance reserves and deposits received

 

 

8,039

 

 

 

8,169

 

Purchase of treasury stock

 

 

(9,227

)

 

 

(10,319

)

Net cash provided by (used for) financing activities

 

 

(92,511

)

 

 

257,934

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(111,983

)

 

 

(63,935

)

Cash, cash equivalents and restricted cash at the beginning of period

 

 

232,741

 

 

 

291,864

 

Cash, cash equivalents and restricted cash at the end of period

 

$

120,758

 

 

$

227,929

 

 

 

 

 

 

 

 

 

 

Noncash Investing and Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of flight equipment included in Accounts payable and accrued liabilities

 

$

51,996

 

 

$

66,944

 

 

See accompanying Notes to Unaudited Consolidated Financial Statements

 

6


 

Atlas Air Worldwide Holdings, Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(Unaudited)

 

 

 

As of and for the Three Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common

 

 

Treasury

 

 

Paid-In

 

 

Accumulated Other

 

 

Retained

 

 

Stockholders'

 

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Comprehensive Loss

 

 

Earnings

 

 

Equity

 

Balance at March 31, 2019

 

$

310

 

 

$

(213,690

)

 

$

741,652

 

 

$

(3,569

)

 

$

1,510,246

 

 

$

2,034,949

 

Net Income (Loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

86,868

 

 

 

86,868

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

257

 

 

 

-

 

 

 

257

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

4,404

 

 

 

-

 

 

 

-

 

 

 

4,404

 

Customer warrant

 

 

-

 

 

 

-

 

 

 

669

 

 

 

-

 

 

 

-

 

 

 

669

 

Purchase of 743 shares of treasury stock

 

 

-

 

 

 

(38

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(38

)

Issuance of 4,385 shares of restricted stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Balance at June 30, 2019

 

$

310

 

 

$

(213,728

)

 

$

746,725

 

 

$

(3,312

)

 

$

1,597,114

 

 

$

2,127,109

 

 

 

 

As of and for the Three Months Ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common

 

 

Treasury

 

 

Paid-In

 

 

Accumulated Other

 

 

Retained

 

 

Stockholders'

 

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Comprehensive Loss

 

 

Earnings

 

 

Equity

 

Balance at March 31, 2018

 

$

305

 

 

$

(203,950

)

 

$

721,577

 

 

$

(4,635

)

 

$

1,279,001

 

 

$

1,792,298

 

Net Income (Loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(21,150

)

 

 

(21,150

)

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

245

 

 

 

-

 

 

 

245

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

4,781

 

 

 

-

 

 

 

-

 

 

 

4,781

 

Purchase of 1,500 shares of treasury stock

 

 

-

 

 

 

(101

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(101

)

Issuance of 15,863 shares of restricted stock

 

 

1

 

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

-

 

 

 

-

 

Balance at June 30, 2018

 

$

306

 

 

$

(204,051

)

 

$

726,357

 

 

$

(4,390

)

 

$

1,257,851

 

 

$

1,776,073

 

 

 

 

As of and for the Six Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

Additional