Quarterly Report (10-q)

Date : 10/30/2019 @ 4:52PM
Source : Edgar (US Regulatory)
Stock : Atlas Air Worldwide Holdings (AAWW)
Quote : 20.17  0.0 (0.00%) @ 5:00AM
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 September 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)

 

 

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

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 October 25, 2019, there were 25,870,876 shares of the registrant’s Common Stock outstanding.

 

 

 


 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

Part I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

3

 

 

 

 

 

 

 

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

 

3

 

 

 

 

 

 

 

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

 

4

 

 

 

 

 

 

 

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

 

5

 

 

 

 

 

 

 

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

 

6

 

 

 

 

 

 

 

Consolidated Statements of Stockholders’ Equity as of and for the Three and Nine Months ended September 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)

 

 

 

September 30, 2019

 

 

December 31, 2018

 

Assets

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

70,327

 

 

$

221,501

 

Short-term investments

 

 

2,129

 

 

 

15,624

 

Restricted cash

 

 

10,376

 

 

 

11,240

 

Accounts receivable, net of allowance of $1,521 and $1,563, respectively

 

 

264,752

 

 

 

269,320

 

Prepaid expenses and other current assets

 

 

82,505

 

 

 

112,146

 

Total current assets

 

 

430,089

 

 

 

629,831

 

Property and Equipment

 

 

 

 

 

 

 

 

Flight equipment

 

 

5,377,985

 

 

 

5,213,734

 

Ground equipment

 

 

87,282

 

 

 

75,939

 

Less:  accumulated depreciation

 

 

(1,020,278

)

 

 

(860,354

)

Flight equipment modifications in progress

 

 

88,632

 

 

 

32,916

 

Property and equipment, net

 

 

4,533,621

 

 

 

4,462,235

 

Other Assets

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

520,063

 

 

 

-

 

Deferred costs and other assets

 

 

403,871

 

 

 

345,037

 

Intangible assets, net and goodwill

 

 

81,590

 

 

 

97,689

 

Total Assets

 

$

5,969,234

 

 

$

5,534,792

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

90,850

 

 

$

87,229

 

Accrued liabilities

 

 

522,694

 

 

 

465,669

 

Current portion of long-term debt and finance lease

 

 

341,807

 

 

 

264,835

 

Current portion of long-term operating leases

 

 

141,362

 

 

 

-

 

Total current liabilities

 

 

1,096,713

 

 

 

817,733

 

Other Liabilities

 

 

 

 

 

 

 

 

Long-term debt and finance lease

 

 

2,031,642

 

 

 

2,205,005

 

Long-term operating leases

 

 

427,459

 

 

 

-

 

Deferred taxes

 

 

186,599

 

 

 

256,970

 

Financial instruments and other liabilities

 

 

33,529

 

 

 

187,120

 

Total other liabilities

 

 

2,679,229

 

 

 

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;

    31,043,847 and 30,582,571 shares issued, 25,867,423 and 25,590,293

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

    and December 31, 2018, respectively

 

 

310

 

 

 

306

 

Additional paid-in-capital

 

 

752,790

 

 

 

736,035

 

Treasury stock, at cost; 5,176,424 and 4,992,278 shares, respectively

 

 

(213,837

)

 

 

(204,501

)

Accumulated other comprehensive loss

 

 

(3,059

)

 

 

(3,832

)

Retained earnings

 

 

1,657,088

 

 

 

1,539,956

 

Total stockholders’ equity

 

 

2,193,292

 

 

 

2,067,964

 

Total Liabilities and Equity

 

$

5,969,234

 

 

$

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 Nine Months Ended

 

 

 

September 30, 2019

 

 

September 30, 2018

 

 

September 30, 2019

 

 

September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue

 

$

648,539

 

 

$

656,607

 

 

$

1,992,140

 

 

$

1,912,766

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

145,987

 

 

 

138,345

 

 

 

432,911

 

 

 

392,603

 

Aircraft fuel

 

 

123,132

 

 

 

119,604

 

 

 

351,611

 

 

 

345,613

 

Maintenance, materials and repairs

 

 

88,240

 

 

 

88,136

 

 

 

305,331

 

 

 

261,251

 

Depreciation and amortization

 

 

62,499

 

 

 

55,417

 

 

 

190,669

 

 

 

155,881

 

Travel

 

 

49,110

 

 

 

41,605

 

 

 

140,513

 

 

 

123,810

 

Aircraft rent

 

 

40,048

 

 

 

39,973

 

 

 

122,271

 

 

 

119,778

 

Navigation fees, landing fees and other rent

 

 

32,270

 

 

 

43,258

 

 

 

110,468

 

 

 

116,553

 

Passenger and ground handling services

 

 

34,453

 

 

 

28,716

 

 

 

97,138

 

 

 

86,980

 

Special charge, net

 

 

18,861

 

 

 

-

 

 

 

22,130

 

 

 

9,374

 

Transaction-related expenses

 

 

324

 

 

 

765

 

 

 

3,585

 

 

 

1,275

 

Other

 

 

54,494

 

 

 

46,318

 

 

 

160,548

 

 

 

143,663

 

Total Operating Expenses

 

 

649,418

 

 

 

602,137

 

 

 

1,937,175

 

 

 

1,756,781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (Loss) Income

 

 

(879

)

 

 

54,470

 

 

 

54,965

 

 

 

155,985

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating  Expenses (Income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(653

)

 

 

(1,592

)

 

 

(3,975

)

 

 

(4,704

)

Interest expense

 

 

30,117

 

 

 

31,115

 

 

 

90,515

 

 

 

87,639

 

Capitalized interest

 

 

(853

)

 

 

(1,120

)

 

 

(1,943

)

 

 

(4,335

)

Loss on early extinguishment of debt

 

 

559

 

 

 

-

 

 

 

804

 

 

 

-

 

Unrealized (gain) loss on financial instruments

 

 

(83,175

)

 

 

(46,080

)

 

 

(78,900

)

 

 

11,691

 

Other (income) expense, net

 

 

1,434

 

 

 

975

 

 

 

(596

)

 

 

(10,777

)

Total Non-operating Expenses (Income)

 

 

(52,571

)

 

 

(16,702

)

 

 

5,905

 

 

 

79,514

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

 

51,692

 

 

 

71,172

 

 

 

49,060

 

 

 

76,471

 

Income tax (benefit) expense

 

 

(8,282

)

 

 

34

 

 

 

(68,072

)

 

 

16,828

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of taxes

 

 

59,974

 

 

 

71,138

 

 

 

117,132

 

 

 

59,643

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of taxes

 

 

-

 

 

 

(7

)

 

 

-

 

 

 

(50

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

59,974

 

 

$

71,131

 

 

$

117,132

 

 

$

59,593

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.32

 

 

$

2.78

 

 

$

4.54

 

 

$

2.34

 

Diluted

 

$

2.32

 

 

$

0.84

 

 

$

1.34

 

 

$

2.27

 

Loss per share from discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

-

 

 

$

(0.00

)

 

$

-

 

 

$

(0.00

)

Diluted

 

$

-

 

 

$

(0.00

)

 

$

-

 

 

$

(0.00

)

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.32

 

 

$

2.78

 

 

$

4.54

 

 

$

2.33

 

Diluted

 

$

2.32

 

 

$

0.84

 

 

$

1.34

 

 

$

2.27

 

Weighted average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

25,854

 

 

 

25,575

 

 

 

25,814

 

 

 

25,526

 

Diluted

 

 

25,854

 

 

 

28,747

 

 

 

26,909

 

 

 

26,274

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 Nine Months Ended

 

 

 

September 30, 2019

 

 

September 30, 2018

 

 

September 30, 2019

 

 

September 30, 2018

 

Net Income

 

$

59,974

 

 

$

71,131

 

 

$

117,132

 

 

$

59,593

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification to interest expense

 

 

331

 

 

 

370

 

 

 

1,012

 

 

 

1,120

 

Income tax expense

 

 

(78

)

 

 

(88

)

 

 

(239

)

 

 

(265

)

Other comprehensive income

 

 

253

 

 

 

282

 

 

 

773

 

 

 

855

 

Comprehensive Income

 

$

60,227

 

 

$

71,413

 

 

$

117,905

 

 

$

60,448

 

 

See accompanying Notes to Unaudited Consolidated Financial Statements

5


 

Atlas Air Worldwide Holdings, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

For the Nine Months Ended

 

 

 

September 30, 2019

 

 

September 30, 2018

 

 

 

 

 

 

 

 

 

 

Operating Activities:

 

 

 

 

 

 

 

 

Income from continuing operations, net of taxes

 

$

117,132

 

 

$

59,643

 

Less: Loss from discontinued operations, net of taxes

 

 

-

 

 

 

(50

)

Net Income

 

 

117,132

 

 

 

59,593

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

241,284

 

 

 

189,682

 

Accretion of debt securities discount

 

 

(237

)

 

 

(719

)

Provision for allowance for doubtful accounts

 

 

(83

)

 

 

40

 

Loss on early extinguishment of debt

 

 

804

 

 

 

-

 

Special charge, net of cash payments

 

 

22,130

 

 

 

9,374

 

Unrealized loss (gain) on financial instruments

 

 

(78,900

)

 

 

11,691

 

Deferred taxes

 

 

(68,552

)

 

 

16,453

 

Stock-based compensation

 

 

16,553

 

 

 

15,376

 

Changes in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

1,397

 

 

 

(59,058

)

Prepaid expenses, current assets and other assets

 

 

(69,254

)

 

 

(34,483

)

Accounts payable and accrued liabilities

 

 

11,016

 

 

 

56,174

 

Net cash provided by operating activities

 

 

193,290

 

 

 

264,123

 

Investing Activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(107,594

)

 

 

(84,819

)

Payments for flight equipment and modifications

 

 

(153,706

)

 

 

(543,342

)

Proceeds from insurance

 

 

38,133

 

 

 

-

 

Proceeds from investments

 

 

14,367

 

 

 

9,461

 

Net cash used for investing activities

 

 

(208,800

)

 

 

(618,700

)

Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from debt issuance

 

 

93,723

 

 

 

400,471

 

Payment of debt issuance costs

 

 

(1,316

)

 

 

(6,632

)

Payments of debt and finance lease obligations

 

 

(273,142

)

 

 

(180,722

)

Proceeds from revolving credit facility

 

 

50,000

 

 

 

135,000

 

Payment of revolving credit facility

 

 

-

 

 

 

(60,000

)

Customer maintenance reserves and deposits received

 

 

11,717

 

 

 

11,520

 

Customer maintenance reserves paid

 

 

(8,174

)

 

 

-

 

Purchase of treasury stock

 

 

(9,336

)

 

 

(10,769

)

Net cash provided by (used for) financing activities

 

 

(136,528

)

 

 

288,868

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(152,038

)

 

 

(65,709

)

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

 

$

80,703

 

 

$

226,155

 

 

 

 

 

 

 

 

 

 

Noncash Investing and Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of flight equipment included in Accounts payable and accrued liabilities

 

$

55,610

 

 

$

42,826

 

Acquisition of property and equipment acquired under operating leases

 

$

21,969

 

 

$

-

 

Acquisition of flight equipment under capital lease

 

$

10,825

 

 

$

-

 

 

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 September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common

 

 

Treasury

 

 

Paid-In

 

 

Accumulated Other

 

 

Retained

 

 

Stockholders'

 

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Comprehensive Loss

 

 

Earnings

 

 

Equity

 

Balance at June 30, 2019

 

$

310

 

 

$

(213,728

)

 

$

746,725

 

 

$

(3,312

)

 

$

1,597,114

 

 

$

2,127,109

 

Net Income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

59,974

 

 

 

59,974

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

253

 

 

 

-

 

 

 

253

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

6,527

 

 

 

-

 

 

 

-

 

 

 

6,527

 

Customer warrant

 

 

-

 

 

 

-

 

 

 

(462

)

 

 

-

 

 

 

-

 

 

 

(462

)

Purchase of 4,064 shares of treasury stock

 

 

-

 

 

 

(109

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(109

)

Issuance of 17,347 shares of restricted stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Balance at September 30, 2019

 

$

310

 

 

$

(213,837

)

 

$

752,790

 

 

$

(3,059

)

 

$

1,657,088

 

 

$

2,193,292

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common

 

 

Treasury

 

 

Paid-In

 

 

Accumulated Other

 

 

Retained

 

 

Stockholders'

 

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Comprehensive Loss

 

 

Earnings

 

 

Equity

 

Balance at June 30, 2018

 

$

306

 

 

$

(204,051

)

 

$

726,357

 

 

$

(4,390

)

 

$

1,257,851

 

 

$

1,776,073

 

Net Income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

71,131

 

 

 

71,131

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

282

 

 

 

-

 

 

 

282

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

4,749

 

 

 

-

 

 

 

-

 

 

 

4,749

 

Purchase of 7,082 shares of treasury stock

 

 

-

 

 

 

(450

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(450

)

Balance at September 30, 2018

 

$

306

 

 

$

(204,501

)

 

$

731,106

 

 

$

(4,108

)

 

$

1,328,982

 

 

$

1,851,785

 

 

 

 

As of and for the Nine Months Ended September 30, 2019