Air T, Inc. · NASDAQ:AIRT
Air T — FY2024 Earnings Presentation
42 slides from Air T's earnings presentation, Jul 1, 2024
Slide 1: FY24 Q4 Update: A Portfolio of Powerful Companies
NASDAQ: AIRT FY24 Q4 Update A PORTFOLIO OF POWERFUL COMPANIES March 31, 2024
Slide 2: Safe Harbor
Statements in this document, 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 e
Slide 3: Who We Are, Operating Highlights, Executive Summary
3 ■ AIR T, INC. (NASDAQ: AIRT) is an industrious American company focusing on growing intrinsic value per share at a high rate. ■ Founded in 1980, our businesses have a history of growth and cash flow generation. ■ Current management has been in place since 2013. The two largest shareholders have se
Slide 4: Contents
1. About AIR T, INC. 2. Performance 3. Our Growth Strategies 4. Appendix - Risk Factors 4 CONTENTS
Slide 5: About AIR T, INC.
ABOUT AIR T, INC. EUG A POR|IFOLIO OF POWERFUL COMPANIES
Slide 6: We are an industrious American company established 40+ years and growing
We are an industrious American company established 40+ years and growing. 6 ■ Our businesses have a history of growth and cash flow generation. ■ We seek to identify and empower individuals and teams who will operate businesses well, increasing value over time. ■ We work to activate growth and overc
Slide 7: Investor-Operator Partnership
“Investor-Operator Partnership” is designed to drive short and long-term value creation. 7 “We want our businesses to be managed by dynamic individuals within high-performance teams. We are set up to make space for dynamos and support their enterprises. The holding company team seeks to focus resour
Slide 8: AIRTING Flywheel
Identify good ideas Build a brand and industrious Match with network capital partners AIRTING FLYWHEEL Secure and empower Generate extremely attractive returns on capital dynamic management EUSA A PORGIFOLIO OF POWERFUL COMPANIES
Slide 9: FY24 Revenue and Adjusted EBITDA, Core Segments
$287M 9 FY24 Revenue $5.6M FY24 Adj. EBITDA* 3 CORE SEGMENTS 14 COMPANIES 624 EMPLOYEES OVERNIGHT AIR CARGO COMMERCIAL JET ENGINES AND PARTS GROUND EQUIPMENT SALES *See Adjusted EBITDA reconciliation on slide 33
Slide 10: FY24 Financial Highlights
AIR T, INC. FY24 Financial Highlights (For the Twelve-Month Period Ended 3/31) 10 FY Results ■ FY24 saw a 16% revenue increase compared to FY23 across all segments. This includes a $23.8M increase in Commercial Jet Engines and Parts, driven by higher component sales due to more activity in the aviat
Slide 11: Commercial Jet Engines and Parts Segment
Commercial Jet Engines and Parts 11 SEGMENT 1 ■ We buy aircraft and engines, then either lease, trade, or send them to part out. ■ We supply parts to maintenance, repair, and overhaul facilities (MRO). ■ Companies in this segment include Contrail, AirCo, AirCo Services, Worthington, Jet Yard, Air’Zo
Slide 12: Overnight Air Cargo Segment
Overnight Air Cargo 12 SEGMENT 2 ■ We operate two of the seven FedEx feeder airlines. ■ Business units Mountain Air Cargo and CSA Air have a 41-year history with FedEx. ■ Air T Companies since 1982, 1983 ■ Air T added Worldwide Aircraft Services (WASI) to this segment in Q4 FY23. ■ Revenues and oper
Slide 13: Ground Equipment Sales Segment
Ground Equipment Sales 13 SEGMENT 3 ■ We manufacture deicing equipment, scissor lift trucks, and other ground support equipment. ■ Sole-source deicer supplier to the US Air Force for 20 years. ■ Highly efficient light manufacturing facility. ■ The segment is comprised of Global Ground Support LLC. ■
Slide 14: Corporate and Other Operating Income
14 SEGMENT 4 FY24 FY23 FY22 FY21 FY20 Corporate ($3.1M)2 ($6.0M) ($5.6M)1 ($5.4M) ($5.3M) Other3 ($5.0M) ($4.6M) ($4.4M) ($4.0M) ($3.8M) Total Corporate and Other ($8.1M) ($10.6M) ($10.0M)1 ($9.4M) ($9.1M) Corporate and Other Subcomponent of Operating Income 1 Excludes one-time Employee Retention Cr
Slide 15: Investing For Growth
15 Investment manager focused on unearthing fundamentally attractive small and mid-cap opportunities. Allows us to further expand upon our idea generation capabilities to identify, analyze, develop and execute innovative investment strategies that are aimed at building better financial futures for a
Slide 16: Air T Digital
Air T Digital 16 ■ We invest in companies that provide digital aviation and other business services that generate recurring subscription revenues. As of 3/31/24 3/31/23 3/31/22 ARR1 $5.9M $4.7M $3.9M 1ARR, or Annual Recurring Revenue, is defined as the monthly recurring revenue as of March 31, 2024,
Slide 17: Aircraft JVs
Aircraft JVs 17 ■ We manage assets for ourselves and our investor partners. The asset types include leased aircraft, consignments, and teardowns. ■ Our Aircraft JVs receive standard aviation industry management fees that include an incentive fee of approximately 20% above a hurdle rate of 0% to 8%,
Slide 18: BCCM Advisors
BCCM Advisors 18 ■ Air T‘s wholly-owned management company, BCCM Advisors, is the manager of a fund focused on growth “at-a- reasonable-price” US Equities, as well as a fund dedicated to equity compounders in Africa. BCCM also conducts ongoing research into new fund approaches. ■ Through 3/31/24, BC
Slide 19: AAM 24-1, LLC News
■ On February 22, 2024, a newly created Air T wholly-owned subsidiary AAM 24-1, LLC, issued a note with a principal amount of $15.0M and an annual interest rate of 8.5%, collateralized by our equity investments into the Aircraft JVs. 19 AAM 24-1, LLC NEWS
Slide 20: Financial Highlights: Ten-Year Revenue Growth
FY14 FY24 Commercial Aircraft & Engines Overnight Air Cargo Ground Support Equipment FINANCIAL HIGHLIGHTS Over the last ten years, revenue has increased 232% and is more diversified. 20 +232% $278M* $84M SEGMENTS REVENUE 62% 38% 42% 13% 45% *Excludes revenue in FY24 earned outside of our core segmen
Slide 21: Non-Operating Assets
Non-Operating Assets 21 AIR T, Inc. owns the following public and private securities: OTHER AIR T, INC. Non-Operating Assets (In Millions) 3/31/24 3/31/23 3/31/22 3/31/21 3/31/20 Lendway, Inc. (LDWY) Stock – 0.5M Shares1,2 $2.2 $3.8 $4.6 $4.3 $2.6 CCI Investment (20.1% as of 3/31/24)3 $3.7 $3.1 $2.6
Slide 22: Capitalization Table
22 CAPITALIZATION TABLE AIR T, INC.’s capital structure is designed to appropriately shape our bet sizes; in part by utilizing non-recourse leverage For example, AIR T guarantees Contrail’s bank loans to a maximum limit of $1.6 million. 1We entered interest rate swaps to provide a fixed rate of 5.09
Slide 23: Calibrated Bets & Capitalization Structure
Calibrated Bets & Capitalization Structure 23 Risk Management: Downside Protection • Anti-fragile company • Islands of segregated assets and businesses • Market-driven and savvy risk management program that oversees all of the company STRUCTURE Tailored, Limited, Convex Exposures • Convexity-promoti
Slide 24: Financial Highlights: AIRT Share Price Increase
FINANCIAL HIGHLIGHTS 24 Since 12/31/2013, the share price of AIRT has increased by 11.7% per annum*+. *Reporting period 9/30/13 to 6/14/24, includes $4M Trust *Preferred dividend to common shareholders + Compares to 11.6% return of the S&P 500 over the same period $22.85
Slide 25: Average Yearly AIRT Stock Price Performance
FINANCIAL HIGHLIGHT. Average Yearly AIRT Stock Price Performance Saring Date wee | vap3isvy | v2rai/1e | 12/39/13 | 12/31/14 | 12/31/15 | 12/31/16 | 12/31/17 | 12/31/18 | 12/31/19 | 12/31/20 | 12/31/21 | 12/31/22 | 12/31/23 31/2 RBs 13/4 RAS 12/7 13/8} Ending Date 12/31/20) 42/30/24 115% | 126% | 17
Slide 26: Growth Strategies
GROWTH STRATEGIES PAN A POR{IFOLIO OF POWERFUL COMPANIES
Slide 27: Our four growth strategies
GROWTH STRATEGIES Our four growth strategies are... 27 ■ Invest to build our current high-performing businesses. ■ Seek to acquire new cash-flow generating businesses. ■ Identify great marketable securities or alternative assets. ■ Create unique investment products and fund alongside third- party ca
Slide 28: Reinvest in high-performing businesses
GROWTH STRATEGY 1 We plan to reinvest in projects at our high-performing businesses by... 28 ■ Purchasing commercial aircraft for trading, leasing and part-out. ■ Purchasing engine parts inventory. ■ Funding deicer builds for Global Ground Support.
Slide 29: Acquire new cash-flow generating businesses
GROWTH STRATEGY 2 We seek to acquire new cash-flow generating businesses by... 29 ■ Identifying and acquiring high- performing businesses with edge in the marketplace, which either complement our current portfolio or diversify into industries beyond aviation.
Slide 30: Identify marketable securities or alternative assets
GROWTH STRATEGY 3 We plan to identify great marketable securities or alternative assets by... 30 ■ Searching for another committed activist opportunity. ■ Investing in distressed and high yield securities. ■ Investing in small cap securities. ■ Further investing in our current securities portfolio.
Slide 31: Create unique investment products with outside capital partners
GROWTH STRATEGY 4 We plan to create unique investment products with outside capital partners by... 31 ■ Offering thoughtful and sustainable products with attractive return profiles ■ Attracting and retaining sophisticated investment professionals and creating space for talented asset managers.
Slide 32: Theoretical Toy Model: Public Company versus Private Equity Fund
Theoretical Toy Model Public Company versus Private Equity Fund 32 TOY MODEL ASSUMPTIONS Annual Return on Investment 5% Taxes Paid by PE Fund @ 7-year Intervals 30% Year Public Company $1 Private Equity Fund $1 Taxes Paid 0 $1.00 $1.00 $0.00 7 $1.34 $1.24 $0.10 14 $1.89 $1.59 $0.15 21 $2.65 $2.04 $0
Slide 33: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 33 FY Results FY24 FY23 FY22 FY21 FY20 Operating Income (GAAP) $1.3M ($4.4M) $8.8M* ($9.2M) 7.3M Depreciation (excluding leased engine depreciation) $2.8M $2.5M $1.6M $1.2M $1.3M Asset Impairment, write- downs, restructuring $1.2M $7.8M $0.8M $6.6M $0.0M Gain on sale o
Slide 34: Q&A with Management
34 Q&A WITH MANAGEMENT
Slide 35: Shareholder Q&A: Interest coverage
Our interactive Q&A capability, through Slido.com, allows shareholders to ask questions of our management. Recently submitted questions have been answered below. To submit your own question, go to (https://app.sli.do/event/j8drfixw).1 35 As EBIT has been volatile, it’s been difficult to discern what
Slide 36: Shareholder Q&A: AIRTP dividend payment
36 Does anyone even review this process? Our interactive Q&A capability, through Slido.com, allows shareholders to ask questions of our management. We plan to present and answer all questions received in a given quarter through a section in the quarterly Investor Presentation. We plan to release an
Slide 37: Shareholder Q&A: Backbone business of AIRT
37 Our interactive Q&A capability, through Slido.com, allows shareholders to ask questions of our management. Recently submitted questions have been answered below. To submit your own question, go to (https://app.sli.do/event/j8drfixw).1 Notes: 1. We plan to present and answer all questions received
Slide 38: Appendix: Risk Factors
APPENDIX Risk Factors EUSA A PORGIFOLIO OF POWERFUL COMPANIES
Slide 39: Summary Risk Factors
SUMMARY RISK FACTORS 39 For more detail and explanation, please see the Company’s public filings including its Form S-3 and prospectus supplements filed with the SEC. The purchase of securities of Air T, Inc., the “Company,” is highly speculative and involves a very high degree of risk. An investmen
Slide 40: Risks Related to Our Segment Operations
Risks Related to Our Segment Operations ● The operating results of our four segments may fluctuate, particularly our commercial jet engine and parts segment. ● Our Air Cargo Segment is dependent on a significant customer. ● Our dry-lease agreements with FedEx subject us to operating risks. ● Because
Slide 41: Risks Related to Our Segment Operations (continued)
Risks Related to Our Segment Operations (continued) ● Our lessees may fail to adequately insure our aircraft or engines which could subject us to additional costs. ● If our lessees fail to cooperate in returning our aircraft or engines following lease terminations, we may encounter obstacles and are
Slide 42: Risks Related to Our Structure and Financing/Liquidity Risks (continued)
Risks Related to Our Structure and Financing/Liquidity Risks (continued) ● Future acquisitions and dispositions of businesses and investments are possible, changing the components of our assets and liabilities, and if unsuccessful or unfavorable, could reduce the value of the Company and its securit