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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, 2020  

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)

 

 

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 July 30, 2020, there were 26,136,036 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 June 30, 2020 and December 31, 2019 (unaudited)

 

3

 

 

 

 

 

 

 

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)

 

4

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)

 

5

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Six Months ended June 30, 2020 and 2019 (unaudited)

 

6

 

 

 

 

 

 

 

Consolidated Statements of Stockholders’ Equity as of and for the Three and Six Months ended June 30, 2020 and 2019 (unaudited)

 

7

 

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

 

8

 

 

 

 

 

Item 2.

 

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

 

21

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

37

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

37

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

39

 

 

 

 

 

Item 1A.

 

Risk Factors

 

39

 

 

 

 

 

Item 6.

 

Exhibits

 

39

 

 

 

 

 

 

 

Exhibit Index

 

40

 

 

 

 

 

 

 

Signatures

 

41

 

 

 

 


PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Atlas Air Worldwide Holdings, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

(Unaudited)

 

 

 

 

June 30, 2020

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

726,402

 

 

$

103,029

 

Restricted cash

 

 

12,776

 

 

 

10,401

 

Short-term investments

 

 

-

 

 

 

879

 

Accounts receivable, net of allowance of $886 and $1,822, respectively

 

 

239,051

 

 

 

290,119

 

Prepaid expenses, assets held for sale and other current assets

 

 

177,978

 

 

 

228,103

 

Total current assets

 

 

1,156,207

 

 

 

632,531

 

Property and Equipment

 

 

 

 

 

 

 

 

Flight equipment

 

 

4,962,987

 

 

 

4,880,424

 

Ground equipment

 

 

86,341

 

 

 

83,584

 

Less:  accumulated depreciation

 

 

(1,068,347

)

 

 

(977,883

)

Flight equipment modifications in progress

 

 

26,960

 

 

 

67,101

 

Property and equipment, net

 

 

4,007,941

 

 

 

4,053,226

 

Other Assets

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

200,194

 

 

 

231,133

 

Deferred costs and other assets

 

 

378,567

 

 

 

391,895

 

Intangible assets, net and goodwill

 

 

73,841

 

 

 

76,856

 

Total Assets

 

$

5,816,750

 

 

$

5,385,641

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

73,812

 

 

$

79,683

 

Accrued liabilities

 

 

653,253

 

 

 

481,725

 

Current portion of long-term debt and finance leases

 

 

275,017

 

 

 

395,781

 

Current portion of long-term operating leases

 

 

143,225

 

 

 

141,973

 

Total current liabilities

 

 

1,145,307

 

 

 

1,099,162

 

Other Liabilities

 

 

 

 

 

 

 

 

Long-term debt and finance leases

 

 

2,238,664

 

 

 

1,984,902

 

Long-term operating leases

 

 

322,450

 

 

 

392,832

 

Deferred taxes

 

 

111,802

 

 

 

74,040

 

Financial instruments and other liabilities

 

 

68,160

 

 

 

42,526

 

Total other liabilities

 

 

2,741,076

 

 

 

2,494,300

 

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;

    31,493,328 and 31,048,842 shares issued, 26,135,945 and 25,870,876

    shares outstanding (net of treasury stock), as of June 30, 2020

    and December 31, 2019, respectively

 

 

315

 

 

 

310

 

Additional paid-in-capital

 

 

801,002

 

 

 

761,715

 

Treasury stock, at cost; 5,357,383 and 5,177,966 shares, respectively

 

 

(217,711

)

 

 

(213,871

)

Accumulated other comprehensive loss

 

 

(2,347

)

 

 

(2,818

)

Retained earnings

 

 

1,349,108

 

 

 

1,246,843

 

Total stockholders’ equity

 

 

1,930,367

 

 

 

1,792,179

 

Total Liabilities and Equity

 

$

5,816,750

 

 

$

5,385,641

 

 

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, 2020

 

 

June 30, 2019

 

 

June 30, 2020

 

 

June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue

 

$

825,253

 

 

$

663,918

 

 

$

1,468,755

 

 

$

1,343,601

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

192,591

 

 

 

141,450

 

 

 

340,335

 

 

 

286,924

 

Maintenance, materials and repairs

 

 

168,300

 

 

 

113,471

 

 

 

262,452

 

 

 

217,091

 

Aircraft fuel

 

 

83,242

 

 

 

122,158

 

 

 

191,560

 

 

 

228,479

 

Depreciation and amortization

 

 

65,826

 

 

 

63,689

 

 

 

123,410

 

 

 

128,170

 

Travel

 

 

34,627

 

 

 

46,374

 

 

 

77,018

 

 

 

91,403

 

Navigation fees, landing fees and other rent

 

 

35,638

 

 

 

37,982

 

 

 

67,039

 

 

 

78,198

 

Passenger and ground handling services

 

 

30,130

 

 

 

30,525

 

 

 

62,089

 

 

 

62,685

 

Aircraft rent

 

 

24,316

 

 

 

40,335

 

 

 

48,283

 

 

 

82,223

 

Loss (gain) on disposal of aircraft

 

 

2

 

 

 

-

 

 

 

(6,715

)

 

 

-

 

Special charge

 

 

15,934

 

 

 

3,269

 

 

 

15,934

 

 

 

3,269

 

Transaction-related expenses

 

 

1,275

 

 

 

734

 

 

 

1,796

 

 

 

3,261

 

Other

 

 

52,710

 

 

 

54,961

 

 

 

103,822

 

 

 

106,054

 

Total Operating Expenses

 

 

704,591

 

 

 

654,948

 

 

 

1,287,023

 

 

 

1,287,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

120,662

 

 

 

8,970

 

 

 

181,732

 

 

 

55,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating Expenses (Income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(224

)

 

 

(1,278

)

 

 

(704

)

 

 

(3,322

)

Interest expense

 

 

28,950

 

 

 

30,045

 

 

 

58,225

 

 

 

60,398

 

Capitalized interest

 

 

(132

)

 

 

(627

)

 

 

(325

)

 

 

(1,090

)

Loss on early extinguishment of debt

 

 

74

 

 

 

-

 

 

 

74

 

 

 

245

 

Unrealized loss (gain) on financial instruments

 

 

30,671

 

 

 

(42,300

)

 

 

29,747

 

 

 

4,275

 

Other (income) expense, net

 

 

(50,598

)

 

 

945

 

 

 

(49,392

)

 

 

(2,030

)

Total Non-operating Expenses (Income)

 

 

8,741

 

 

 

(13,215

)

 

 

37,625

 

 

 

58,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

111,921

 

 

 

22,185

 

 

 

144,107

 

 

 

(2,632

)

Income tax expense (benefit)

 

 

33,009

 

 

 

(64,683

)

 

 

41,842

 

 

 

(59,790

)

Net Income

 

$

78,912

 

 

$

86,868

 

 

$

102,265

 

 

$

57,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

3.02

 

 

$

3.36

 

 

$

3.93

 

 

$

2.22

 

Diluted

 

$

3.01

 

 

$

1.61

 

 

$

3.92

 

 

$

2.21

 

Weighted average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

26,129

 

 

 

25,851

 

 

 

26,048

 

 

 

25,794

 

Diluted

 

 

26,182

 

 

 

26,953

 

 

 

26,074

 

 

 

25,921

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying Notes to Unaudited Consolidated Financial Statements

4


Atlas Air Worldwide Holdings, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

June 30, 2020

 

 

June 30, 2019

 

Net Income

 

$

78,912

 

 

$

86,868

 

 

$

102,265

 

 

$

57,158

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification to interest expense

 

 

296

 

 

 

337

 

 

 

604

 

 

 

681

 

Income tax benefit

 

 

(70

)

 

 

(80

)

 

 

(133

)

 

 

(161

)

Other comprehensive income

 

 

226

 

 

 

257

 

 

 

471

 

 

 

520

 

Comprehensive Income

 

$

79,138

 

 

$

87,125

 

 

$

102,736

 

 

$

57,678

 

 

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, 2020

 

 

June 30, 2019

 

 

 

 

 

 

 

 

 

 

Operating Activities:

 

 

 

 

 

 

 

 

Net Income

 

$

102,265

 

 

$

57,158

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

157,509

 

 

 

157,820

 

Amortization (accretion) of debt securities discount

 

 

(2

)

 

 

208

 

Provision for (reversal of) expected credit losses

 

 

(6

)

 

 

4

 

Loss on early extinguishment of debt

 

 

74

 

 

 

245

 

Special charge, net of cash payments

 

 

15,934

 

 

 

3,269

 

Unrealized loss (gain) on financial instruments

 

 

29,747

 

 

 

4,275

 

Loss (gain) on disposal of aircraft

 

 

(6,715

)

 

 

-

 

Deferred taxes

 

 

39,518

 

 

 

(60,122

)

Stock-based compensation

 

 

10,506

 

 

 

10,025

 

Changes in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

51,781

 

 

 

26

 

Prepaid expenses, current assets and other assets

 

 

(19,115

)

 

 

(23,835

)

Accounts payable, accrued liabilities and other liabilities

 

 

178,894

 

 

 

(40,076

)

Net cash provided by operating activities

 

 

560,390

 

 

 

108,997

 

Investing Activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(25,095

)

 

 

(76,754

)

Payments for flight equipment and modifications

 

 

(59,919

)

 

 

(99,161

)

Proceeds from insurance

 

 

-

 

 

 

38,133

 

Proceeds from investments

 

 

881

 

 

 

9,313

 

Proceeds from disposal of aircraft

 

 

44,110

 

 

 

-

 

Net cash used for investing activities

 

 

(40,023

)

 

 

(128,469

)

Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from debt issuance

 

 

321,518

 

 

 

19,723

 

Payment of debt issuance costs

 

 

(3,910

)

 

 

(955

)

Payments of debt and finance lease obligations

 

 

(274,960

)

 

 

(160,091

)

Proceeds from revolving credit facility

 

 

75,000

 

 

 

50,000

 

Customer maintenance reserves and deposits received

 

 

6,010

 

 

 

8,039

 

Customer maintenance reserves paid

 

 

(14,437

)

 

 

-

 

Treasury shares withheld for payment of taxes

 

 

(3,840

)

 

 

(9,227

)

Net cash provided by (used for) financing activities

 

 

105,381

 

 

 

(92,511

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

625,748

 

 

 

(111,983

)

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

 

 

113,430

 

 

 

232,741

 

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

 

$

739,178

 

 

$

120,758

 

 

 

 

 

 

 

 

 

 

Noncash Investing and Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of flight equipment included in Accounts payable and accrued liabilities

 

$

13,613

 

 

$

51,996

 

Acquisition of property and equipment acquired under operating leases

 

$

1,918

 

 

$

-

 

Customer maintenance reserves settled with sale of aircraft

 

$

6,497

 

 

$

-

 

 

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, 2020

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common

 

 

Treasury

 

 

Paid-In

 

 

Accumulated Other

 

 

Retained

 

 

Stockholders'

 

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Comprehensive Loss

 

 

Earnings

 

 

Equity

 

Balance at March 31, 2020

 

$

315

 

 

$

(217,705

)

 

$

782,517

 

 

$

(2,573

)

 

$

1,270,196

 

 

$

1,832,750

 

Net Income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

78,912

 

 

 

78,912

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

226

 

 

 

-

 

 

 

226

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

6,646

 

 

 

-

 

 

 

-

 

 

 

6,646

 

Issuance of warrants

 

 

-

 

 

 

-

 

 

 

11,840

 

 

 

-

 

 

 

-

 

 

 

11,840

 

Treasury shares of 206 withheld for payment of taxes

 

 

-

 

 

 

(6

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6

)

Issuance of 9,919 shares of restricted stock

 

 

 

 

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

-

 

 

 

(1

)

Balance at June 30, 2020

 

$

315

 

 

$

(217,711

)

 

$

801,002

 

 

$

(2,347

)

 

$

1,349,108

 

 

$

1,930,367

 

 

 

 

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

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

86,868

 

 

 

86,868

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

257

 

 

 

-

 

 

 

257

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

4,404

 

 

 

-

 

 

 

-

 

 

 

4,404

 

Issuance of warrant

 

 

-

 

 

 

-

 

 

 

669

 

 

 

-

 

 

 

-

 

 

 

669

 

Treasury shares of 743 withheld for payment of taxes

 

 

-

 

 

 

(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 Six Months Ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common

 

 

Treasury

 

 

Paid-In

 

 

Accumulated Other

 

 

Retained

 

 

Stockholders'

 

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Comprehensive Loss

 

 

Earnings

 

 

Equity

 

Balance at December 31, 2019

 

$

310

 

 

$

(213,871

)

 

$

761,715

 

 

$

(2,818

)

 

$

1,246,843

 

 

$

1,792,179

 

Net Income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

102,265

 

 

 

102,265

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

471

 

 

 

-

 

 

 

471

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

10,506

 

 

 

-

 

 

 

-

 

 

 

10,506

 

Issuance of warrants

 

 

-