Air T, Inc. · NASDAQ:AIRT
Air T — Q3 FY2024 Earnings Presentation
42 slides from Air T's earnings presentation, Apr 4, 2024
Slide 1: FY24 Q3 Update: A Portfolio of Powerful Companies
NASDAQ: AIRT FY24 Q3 Update A PORTFOLIO OF POWERFUL COMPANIES December 31, 2023
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: Executive Summary: Who We Are and Operating Highlights
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: FY23 Revenue, Adj. EBITDA and core segments
$247M 9 FY23 Revenue $6.0M FY23 Adj. EBITDA* 3 CORE SEGMENTS 14 COMPANIES 584 EMPLOYEES OVERNIGHT AIR CARGO COMMERCIAL JET ENGINES AND PARTS GROUND EQUIPMENT SALES *See Adjusted EBITDA reconciliation on slide 34
Slide 10: FY23 Financial Highlights
AIR T, INC. FY23 Financial Highlights (For the Twelve-Month Period Ended 3/31) 10 FY Results ■ FY23 saw a 40% revenue increase across all segments. This includes a $44.0M increase in Commercial Jet Engines and Parts, which was driven by higher component sales due to more activity in the aviation ind
Slide 11: YTD FY24 Financial Highlights
AIR T, INC. YTD FY24 Financial Highlights (For the Nine-Month Period Ended 12/31) 11 FY Results ■ YTD FY24 saw a 24% revenue increase compared to YTD FY23 across all segments. This includes a $26.9M increase in Commercial Jet Engines and Parts, which was driven by higher component sales due to more
Slide 12: Commercial Jet Engines and Parts Segment
Commercial Jet Engines and Parts 12 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 13: Overnight Air Cargo Segment
Overnight Air Cargo 13 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 14: Ground Equipment Sales Segment
Ground Equipment Sales 14 SEGMENT 3 ■ We manufacture deicing equipment, scissor lift trucks, and other ground support equipment. ■ Sole-source deicer supplier to the US Air Force for 19 years. ■ Highly efficient light manufacturing facility. ■ The segment is comprised of Global Ground Support LLC. ■
Slide 15: Corporate and Other Subcomponent of Operating Income
15 SEGMENT 4 FY23 FY22 FY21 FY20 Corporate ($6.0M) ($5.6M)1 ($5.4M) ($5.3M) Other2 ($4.6M) ($4.4M) ($4.0M) ($3.8M) Total Corporate and Other ($10.6M) ($10.0M)1 ($9.4M) ($9.1M) Corporate and Other Subcomponent of Operating Income 1 Excludes one-time Employee Retention Credit of $9.1M. Reported FY22 O
Slide 16: Investing For Growth
16 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 17: Air T Digital
Air T Digital 17 ■ We invest in companies that provide digital aviation and other business services that generate recurring subscription revenues. As of 12/31/23 3/31/23 3/31/22 ARR1 $5.8M $4.7M $3.9M 1ARR, or Annual Recurring Revenue, is defined as the monthly recurring revenue as of December 31, 2
Slide 18: BCCM and Aircraft JVs
BCCM and Aircraft JVs 18 ■ We manage assets for our investor partners. The asset types include leased aircraft, consignments, teardowns as well as domestic and African equities. ■ Through 12/31/23, Air T’s asset management activities have not generated positive Adjusted EBITDA. As of 12/31/23 3/31/2
Slide 19: WASI Acquisition
■ On January 31, 2023, we completed the acquisition of Worldwide Aircraft Services (“WASI”), an aircraft repair station that began operations in 1986 located in Springfield, MO, for $3.1M. 19 WASI Acquisition NEWS
Slide 20: Financial Highlights: Ten-Year Revenue Growth
FY14 FY23 Commercial Aircraft & Engines Overnight Air Cargo Ground Support Equipment FINANCIAL HIGHLIGHTS Over the last ten years, revenue has increased 187% and is more diversified. 20 +187% $240M* $84M SEGMENTS REVENUE 62% 38% 38% 20% 42% *Excludes revenue in FY23 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) 12/31/23 3/31/23 3/31/22 3/31/21 3/31/20 Lendway, Inc. (LDWY) Stock – 0.5M Shares1,2 $3.0 $3.8 $4.6 $4.3 $2.6 CCI Investment (20.1% as of 12/31/23)3 $4.2 $3.1 $2
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 Growth
FINANCIAL HIGHLIGHTS 24 Since 12/31/2013, the share price of AIRT has increased by 9.8% per annum*+. *Reporting period 9/30/13 to 3/12/24, includes $4M Trust *Preferred dividend to common shareholders + Compares to 11.4% return of the S&P 500 over the same period $18.42
Slide 25: Average Yearly AIRT Stock Price Performance
FINANCIAL HIGHLIGHTS Average Yearly AIRT Stock Price Performance 1a/ai/i2 PA 2.7% ia/aiia | iaraiia | iaraiis | iasaiie | i2aii7 [12/3718 | 12731719 ayaa | 12/31/22 WAV AVE AVS RAVIE RAVT RAVE RAS 12/3720 12/31/21 Ending Date 11.5% 9.2% 25% | 126% | 174% | 11.7% | 1.0% | [0.4% _| Average Yeory AiR 0
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 (Fiscal Years)
Adjusted EBITDA Reconciliation 33 FY Results FY23 FY22 FY21 FY20 Operating Income (GAAP) ($4.4M) $8.8M* ($9.2M) 7.3M Depreciation (excluding leased engine depreciation) $2.5M $1.6M $1.2M $1.3M Asset Impairment, write-downs, restructuring $7.8M $0.8M $6.6M $0.0M Gain on sale of PP&E $0.0M $0.0M ($0.0
Slide 34: Adjusted EBITDA Reconciliation (Nine Months)
Adjusted EBITDA Reconciliation 34 FY Results FY24 FY23 FY22 FY21 Operating Income (GAAP) ($0.2M) $1.1M $0.7M ($2.9M) Depreciation (excluding leased engine depreciation) $2.1M $1.8M $1.0M $0.9M Asset Impairment, write-downs, restructuring $0.3M $2.2M $0.0M $0.7M Gain on sale of PP&E ($0.0M) ($0.0M) $
Slide 35: Q&A with Management
35 Q&A WITH MANAGEMENT
Slide 36: Shareholder Q&A
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 36 Why is your stock down?2 We do not comment on our stock price.
Slide 37: Shareholder Q&A (continued)
37 Why doesn’t this company just part itself out? Surely the two owners of 66% realize that a sale and debt paydown is better than an equity wipeout.2 Thank you for your assertive question. We believe in the power of building businesses for the long term, and holding them in a public company structu
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) ● Our current financing arrangements require compliance with financial and other covenants and a failure to comply with such covenants could adversely affect our ability to operate. ● Future acquisitions and dispositions of bus